Volume Variance

In a two-way or three-way analysis of overhead variance, the volume variance is the budget based on standard hours allowed for the actual units and the applied overhead. There will be a volume variance only when fixed and variable overhead are both being analyzed because, for variable overhead, the budget based on standard hours allowed will be the same as the applied overhead (which is based on the standard rate times the actual units). See also spending variance and efficiency variance and budget (controllable) variance.